Loss is setback, but Motorola's hopes of forcing licensing under threat of a ban are still alive

Motorola Mobility has lost a 3G patent claim against Apple, Inc.'s (AAPL) in Mannheim regional court in Germany. The preliminary loss is the first for the Android phonemaker, who thus far has done very well in German court.

Apple international patent rumble with Samsung Electronics Comp., Ltd. (KS:005930) has drawn the bear's share of the tech community's attention -- thanks to the fact that the companies are vying for the number one spot in smartphone sales. But Apple is fighting a quieter, but equally important legal war against Motorola Mobility.

I. Key Decisions Have Apple on the Ropes in Germany

Motorola, who may soon be owned by Android maker Google Inc. (GOOG) pending rulings on its acquisition bid, is fighting a particular fierce legal battle in Germany, where it's scored two key victories -- one against Apple's use of 3G signal technology, and one against Apple's use of push email via the iCloud.

Samsung has drawn criticism for refusing to license to Apple standards patents -- patents governed by the "fair, reasonable, and non-discriminatory" (FRAND) rules of mandatory licensing -- instead looking to ban Apple's products with them (Samsung defends this approach, saying it is not possible to reasonably license when Apple is trying to ban its products).

By contrast Motorola has made a big point of making it clear that it does not want to ban Apple's products, unless it has to, and that its main objective is to get Apple to pay it a "fair and reasonable" rate for its 3G-related patents.

Motorola, unlike Samsung, hopes that it can negotiate licensing terms with Apple for its 3G FRAND patents, but has allegedly been met with resistance. [Image Source: Device Mag]

Motorola defines this rate as 2.25% of the net-selling-price (to carriers, not to customers) of the 3G iPhone and iPad models. Apple appears to feel that this rate is not "fair", and further that it' worthwhile to try to make Motorola prove its case before agreeing to licensing.

It is hard to objectively determine whether this rate is truly "fair" as the terms of most licensing agreements are not made public, and further likely vary on a case-by-case basis.

Motorola has gone a long ways towards providing such "proof", winning two German rulings against the Cupertino company, thus far. The iCloud is currently banned in Germany due to one of those rulings, preventing some Germans from receiving push email service. A ban on the sales of iPads and iPhones using 3G -- originally set to go into place last week -- is set to resume soon, after a brief respite was handed down from the higher Düsseldorf Higher Regional Court.

II. Motorola Gets First Taste of Defeat

But in its latest case, Motorola was not as fortunate. It claimed that Apple infringed claim 9 of EP1053613 a "method and system for generating a complex pseudonoise sequence for processing a code division multiple access [CDMA] signal".

Motorola claimed a similar technology appeared in the iPhone, given that it used modern 3G signals. The point of contention here was whether there were potential alternative implementations.

Typically with a FRAND patent relating to wireless communications, it's restricted because there's only one optimal way to handle a certain signal problem, within a certain specification. Hence allowing a company to deny its competitors access would stifle the industry and potentially create a monopoly.

But here Apple essentially argued the "FRAND" patent wasn't FRAND. While it offered no direct evidence to support that its phone implemented a different algorithm, it essentialy argue that the burden of proof was on Motorola to find and demonstrate the algorithm was being used in the iPhone and iPad's hardware or software.

Interestingly, the German judge bought this novel defense. He took issue with the use of the word "means" in the patent, according toFossPatent. He said that since the patent was demonstrating means, it was effectively not a standards (FRAND) patent, but rather an implementation patent. Thus Motorola was trying to prove the wrong point; looking to prove standards use versus looking to prove a common implementation.

The ruling could have important implications locally in Germany, as it opens the door for further dissection of FRAND patents.

The judge dismissed the case, as a results, so there's no "round two" for Motorola, in this case, barring an appeal to the Düsseldorf Higher Regional Court.

Following the Mannheim rejection this week, Motorola is 2-for-3 in patent cases it has brought against Apple in the EU's third largest smartphone and tablet market. Apple is working very hard to either prove the invalidity of Motorola patents in these victories, or win an appeal on the ground that it is not infringing on them.

Either way, if even one survives, it could force Apple to pay licensing fees to Motorola. The last thing Apple wants is to be stuck playing Samsung to Motorola's Microsoft. Its victory this week took it one step closer to unwinding Motorola's string of victories. But there's a long hard road ahead if it hopes to emerge fully victorious.

A fourth case will be ruled on April the 13th -- a Friday. That case is tied to the two victorious ones -- the GPRS (3G) patent case and the push-email patent case. Motorola originally won when Apple no-showed in November, but in a second trial in court last week Apple was determined to make a deal.

In exchange for acknowledging the validity of Motorola's GPRS FRAND patent, Apple would want to reserve the privilege to challenge future applications on the basis of "patent exhaustion" -- meaning that it would likely not have to pay royalties on the iPhone 4S, despite its use of 3G. The court wasn't buying this argument, but the final ruling won't come until April 13.

An injunction could force Apple into the one thing it most wants to avoid -- a royalties sharing arrangement.